Most prospective house hunters or sellers think they have a “good” agent. Either it’s someone who they previously worked with or perhaps a referral from a friend for co-worker. One of the big reasons for having confidence in their agent is a belief that the agent is “on their side” and “honest” etc etc. I would suggest however that by a certain point in the process, your agent is your enemy and you are negotiating against them more than the other party. This post deals with the buy side of the house buying game. The next post will deal with the sell side.
In the beginning: happy friends
When a house buyer first signs up with an agent then things are usually pretty rosy, the agent assures the person that they can find an appropriate house for a price you can afford and everything will be great. The agent has “lots” of experience and knows the area inside out. At this stage of the game, you and your agent are mostly on the same page. You want to buy a house and they want you to buy a house. Your agent will most certainly want to get the process over with sooner rather than later but that’s usually the case with the buyer as well.
During the search: uneasy allies
Agents know that they need to spend a fair bit of time with a buyer especially ones who want to look at a lot of houses. After a while however it’s not worth it for an agent to continue a long search especially if their contract is running out. This is the time when the agent will start trying to convince the buyer to lower their standards and raise their prices. Sometimes this is educational if the buyer has unrealistic expectation but mainly this is to speed up the process so the agent can get paid. I should point out however that real agents are normally quite useful during the search since they often know more than you do about the general real estate and can get you access to private showings. The other big benefit is their access to sale price information for similar houses.
Thinking about putting in an offer – Trust no one!
The point when the buyer submits a offer on a house is a time when a lot of house buyers – particularly first timers feel out of their element and defer to their agent for advice. This is the worst thing you can do. Your agent gets paid when the deal gets done and only when it gets done.
This is a time when knowledge of the real estate market should be a big help in determining how much negotiation should be done. As well, if the buyer is not in a hurry to buy then that sets up a great negotiation opportunity. However if there is one thing that real estate agents don’t like it’s clients who negotiate hard – why? Because the only way to negotiate properly in a deal is to be able to walk away if the price you want isn’t met. The way an agent sees this type of situation is that if a deal falls through then they have to spend a lot more time looking at houses before they get paid.
Things that your agent might say (and you should ignore) when you are about to put in a bid are:
- “Don’t bid too low or you will offend the sellers”. This is garbage – if the sellers can’t handle a low ball bid then they are unrealistic. And what exactly is a bid that is “too low”? I’m not saying put in an unrealistic bid but don’t be afraid to start lower and work your way up. As I mentioned before it’s important to know the market so that you don’t have to rely on the asking price or your agent to tell you the proper market value of the house.
- “Don’t bid too low or you might offend the selling agent and might I have to work with them in the future”. This stunning example of gall and self-interest was actually told to Mr. Cheap. I don’t think this one needs any further comments.
- “You should get a bid in quickly before someone else puts a bid in”. This is a favourite of my agent – create a sense of false urgency, get the deal in motion and get it done ASAP. Sometimes this is good advice but other times – such as when the house has been sitting on the market for a month or longer then it’s just not appropriate.
- “Someone else is looking at the house later today and they are really interested”. This lie usually originates with the selling agent but smart buying agents are usually more than willing to play along because it will increase the chances of their buyer putting in an offer in that day.
Negotiation – don’t listen to a word your agent has to say.
At this point you are potentially pretty close to buying a house. You want to buy the house but at the lowest price, the seller wants to sell the house to you but at the highest price and your agent wants you to buy the house and doesn’t care at all what price you buy it for because they just want the deal done right now. Since paying a higher price will get the deal done quicker a lot of agents will encourage you to bid higher which basically means that you are negotiating against them as well as the seller.
Things that your agent might say (and you should ignore) when you are negotiating are:
- “Meet them halfway or in the middle”. This sounds quite reasonable at first- if the asking price of a house is $500k and you bid $460k and they come back with $490k then isn’t splitting the difference at $475k quite reasonable? Not if you can get the house for $470k or $465k. The fact is that the asking price of the house and your first bid are very arbitrary numbers and splitting the difference between the two might end up in a price that is not market value.
- “Are you willing to lose this house for $2,000?” (or $5k, $8k) This is a tough one – on the one hand it seems silly to not buy a house and be only a half of a percent away from a deal but on the other hand shouldn’t your agent be asking this question to the seller? Ie – “we are going to walk, do you really want to lose this deal for $2k?”
- “Are you willing to lose this house for $12 a month?” This is part two of the previous point which is applied if you don’t bite on the first attempt. It’s also a more useful gambit if the “separation” is a bit greater. If you and the seller are $12,000 apart then that sounds pretty significant but what if you are only $75 a month apart (for 25 years) or even better what if you are only $63/month apart (over 40 years).
Conclusion
The more you educate yourself about the real estate market you are looking in and how real estate agents operate then the better off you will be when buying a house. Real estate agents are quite useful because they can get you access to houses for sale and will often drive you around to look at them plus they have access to the sale price of other houses. Whatever you do, never forget that they get paid when the deal gets done and only then. They don’t get paid for showing you more houses or walking away from close deals.
Tune in tomorrow when we take a look at the trustworthiness of real estate agents when selling a house.
Take a look at another perspective on real estate agents that Mr. Cheap wrote.
Do you have any good “lines” that you were told when buying a house?
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Dear Dan and Mike,
Mike I see your point. The cost of my business is not what you care about as a seller. It is the fee only. I understand this. My point of that write up was to show everyone we agents are not just making cobbs of money and doing nothing for it. As far as the sandwich shop case. I think this is way off. The problem with real estate is it is business and frankly everyone is emotional about it. Imagine you had a sandwich shop and people coming in and taking up hours of your time to decide which sandwich to order and than when you give it to them they are scared if they made the right decision, did they pay to much, is it the best sandwich out there. Than you have to coach them on how to pay for that sandwich. If you had to do all this than I think your sandwich would be $400. People have emotions and these emotions cost us agents time and money a lot of times. I have never seen anyone who got mad and cried because McDonald’s put pickles on there burger when they said no pickles. Most people pick them off, throw them in the parking lot and drive on. In this sandwich shop idea it is like a 1 cent pickle on a 1 dollar burger. In real estate it is like a 1000 dollar water heater on a 100,000 home. People will fight over 1000 dollars, especially if they are buying only a 100,000 home. (Disclosure: Nothing is wrong with 100,000 homes, they are the best in our market at this time) The idea of volume does not work in the real estate market because of people having emotions. There are some agents that sell foreclosures who try to do this volume thing. Most of them do not work with buyers. If you call them to see there house, most of them will not call you back unless they have a buyer’s agent. Than that agent may call you back. If you call one of them to come list your property, most of them will come be very blunt about what needs to happen to your house and price. They will spend about 30 minutes walking around your house. They will act like they need to hurry and go. They always act like this because they do have so much to do.You may think this is great, no fluff. Wrong. These agents most of the time (probably 90%) make the average seller mad, because the average seller thinks there house is great, everyone wants it. There is also another company who has tried this, a big company ( I wouldn’t mention there name). They have a program where you can pay $500 and they will put your house in the MLS. You get the calls for appointments, not the agent. There is no other marketing. The agent does not call you. They are done when it hits the MLS. Everyone thinks this is a great idea. They hear you got to be in the MLS to sell your house. Most people have been unhappy with there services I think. They feel like they paid that money there house did not sell, and they end up listing with a realtor anyways. So they spent $500 for a lesson. The remark about if there would be less agents we would make more money. This is also false. There is a stat out there. It is older than dirt. It came out when the books”Richest man in Babylon” and “Think and Grow Rich” came out ( which was 1926 and 1937 by the way). The stat is that 90% of the world is ran by 10% of the population. This is true for everything. 10% of the people run the other 90%. With that said, in the business world, including real estate. 10% of the agents are making the big bucks and 90% are starving. You think this 10% have some secret and they keep it secret to get all the business? Wrong. Most of them travel the country and speaking to the other 90% of agents, telling them what they do. So my point is that it does not matter how many agents are in the business. The 10% of agents making it will make it regardless of how many agents are in the business. Bill Gates and Warren Buffett will always make money regardless of how many people create programs or get into the stock market. You could strip them both today of every penny they have. I would bet everything I have that they would be back a multi millionaire in a year or less and a billionaire in less than 3 years. It’s because of what is between there ears not how many people are in the business. I will tell you one thing and I believe this to be true. If there were less agents out there and it put us agents in so high demand. Guess what would happen? Like any business if demand goes up so does price. So the market being flooded in agents makes the commission stay as low as it is. Just like what you have seen in the market lately. Flooded with houses so the price is coming down.
Mike,
If you had a BMW. A real nice one, like a new 7 series. You wanted to sell it. You put it in the yard with a sale sign in the window. You look at your neighbors and see you are surrounded by farmers. These farmers think your funny anyways for buying such a vehicle instead of a truck. What would you do than? You would probably either hire someone to try to sell it for you. Or you would try to find out a way to expand out and find a buyer somewhere else. You may would have to market in a big city somewhere. What most people do is when there cost goes up they just charge more for what they are selling. For Sale By Owners do this all the time. It’s called a cost + approach. It usually results in being overpriced by the way. This is why there can’t be flat rate fees for things. I do different things for different priced homes. If you have a million dollar house. I am not coming over with the camera to take pictures. I am getting a scissor lift with a professional photographer over to your house. I am having professional brochures made up, not the ones anyone can make at home. I am sending these brochures to the Top CEO’s in New York to see if they may want to move. Now if you have a 100,000 farm house. I will send your neighbors the post cards and pictures will be made by me standing on my vehicle trying to get a great angle. I will put black and white brochures at the road and decent 5 or 6 color page brochure’s in the house for the buyer’s who have alot of interest. The point is as the commission goes up so does the marketing usually. The million dollar house, the agent has spent a couple thousand up front before the home has even hit the market. The 100,000 house, the agent has spent maybe 200 dollars the day it hits the market. This is why there can not be a set rate of fee.
The agent makes a big difference to. I will not write a book about this, but there are agents out there that there buyer’s and seller’s would gladly pay twice what they are paying them. These agents are very rare, but they are out there. These agents are probably in the top 1 or 2 % of all the agents.
Keep them coming. I am waiting for someone to stump me. Thanks Mike and Dan.
Marcelann,
Eveyone who hates us real estate agents and thinks we are the dirt on your shoe. You have done it now. Marcelann is on fire! LOL
Mike & Dan,
2 comments
1) if I may use your sandwich analogy with your commission rationale, then I should not care one iota about any of the overhead you as a sandwich shop owner incurs, you should be selling me the sandwich your employees made, using supplies you ordered from a dozen different suppliers, in a store you pay rent for, on plates you purchased (shall I continue?) for NO MORE than it would normally cost me to buy 2 slices of bread, 2 thin slices of ham and a sliver of cheese or else you’re overcharging me? If you just love your craft and don’t care about paying bills, feeding your kids and dare I say, take an occasional vacation – then go ahead! Most folks actually like to earn proportionally to the amount of knowledge they are expected to have, the effort the are required to put in and and risks their job requires.
2) About selling more homes for less commission – that may sound feasible in your close-minded fantasy, but there are only so many hours in a given day and so many sandwiches one person can make while also handling suppliers, phone calls, customers, cleaning etc… because for the analogy to be fair, you got to compare it equally. I won’t speak for other provinces or states, but in Quebec, Realtors are responsible and LIABLE for loads of diligence and counsel which Realtors in other areas are not on the hook for and can redirect that time to handle more sales. An agents closing 30 or more transactions a year work their butts of out here! Additionally, unlike your sandwich shop where you can hire a struggling student to slap the ham and cheese together or handle the cash resgister, Realtors cannot just hire someone off the street… only licenced agents are allowed to handle a vast majority of tasks, even as simple as answering a question about how many bedrooms a property has. So unless you are willing to come to MY PLACE OF BUSINESS, during my business hours, line up and wait for your 3½ minutes of my attention, figure all the contingencies on your own, know what you want and willing to pay months-worth of sandwiches 2-4 months upfront – your sandwich analogy is hogwash.
Now we agents can probably try to convince you until our fingertips are blue, but here is my invitation to you: if you already know all you need to handle your transactions and think our job is really not as demanding or hard as we bleading hearts make it out to be, then come I am sure you won’t mind walking a mile in our shoes…. Come live our life for 2 months – what do you have to lose? You’ll surely close loads of transactions and make easy money? When you have achieved such easy and cheap success, then, and only then, can you judge us, criticize us and put our business down.
Until then, you’re just misleading, misrepresenting and misguided.
REALTORS OUT THERE: stop catering to these real estate bullies who will convince you that they can do as good as you and that your service is worthless. It is incumbet on all of you/us, to bring the standard up and fight for ourselves just as much as we fight for our clients. If cannot earn and defend our value, don’t expect anyone else to.
Good night
Marcelann,
I understand your defensiveness on the subject. This is your livelihood we are critiquing. My point about the café owner was not at all about what you tried to reframe it as (the sandwich should cost no more than the materials) but rather, about MARKET FORCES. Burger king is selling a double-cheesburger right now for a buck. It costs them WAAAY more than a dollar to make that burger (in fact, it would cost ME more than a buck to make that burger in my house) but the market is forcing them to offer the deal to keep customers coming through the door in the hopes they will buy something else. Realtors could do the same thing with value added services.
In the case of the realtor who can’t make a living selling 3 homes a year I say “Duh!” . That’s part time work and would represent a couple of weeks of effort. Are you saying that if you sell 30 homes a year that you can’t make a living? You have roughly 2550 hours a year to work your business. That gives you 63 hours to sell a home to get to 20 per year leaving another 6 months per year to do paperwork, work your prospect list, and show homes to looky-loos.
I’ve sold 3 of my last 4 homes myself and it took me probably 50 hours cumulative effort each to do it. That included the paperwork. The problem real estate agents have is that the layman IS capable of doing your job. Selling a house is not unlike a lot of jobs out there. We COULD do it ourselves but it’s a hassle so we hire someone else to do it. If the price to have someone replace my brakepads is $69 I’ll have someone else do it. If it costs any more than that, I’ll do it myself. Simple market econ 101.
Currently I design and install large integrated audio/video systems for corporate clients (boardrooms, stadiums, call centers, airports, etc.). There aren’t but 50 people in my metropolitan area that can do this kind of work. There are precisely ZERO laypeople who can do it. Yet, because of the market, I still make only about $23 per hour doing that work. The market at work.
Like I said, I understand your frustration with laypeople criticizing your industry but you have to admit, it is an industry deserving criticism. It needs reforming and it needs it soon or hard-working people such as yourself are going to end up getting squeezed.
Cheers
I should followup by asking “can you tell I’ve been burned by the real estate industry?” The reason I sold 3 of the last 4 homes I’ve had is because I was forced to due to lazy and incompetent agents who wouldn’t or couldn’t do their jobs. I hired several different agents, 4 out of 5 of whom did a great job of putting my house on the MLS system (!) after which they sat around and waited for someone else to sell my house. One of the 5 managed to list my house incorrectly on the MLS and I didn’t know about it until another agent asked me why I hadn’t included in the listing, the pivotal fact that my home was lakefront property! I went 4 months with hardly any hits (most of which came from our yard sign) because the listing was wrong.
Another buyer’s agent did a comp of one of my homes with another one across the street for their prospective buyer but the comp was incorrect by about 2 years (the home had subsequently sold for $200K more than the previous sale). They offered me a number similar to the outdated comp and I countered knowing that they were offering an uneducated number. When I informed their agent that she was using the wrong comparable the agent refused to tell her client that she was a bonehead and had made a huge error. They never came back. Later I sold the house myself.
Here’s the problem with paying a $30K commission to sell a $500,000 house. I could go out and run an ad campaign on local radio and maybe even buy a billboard for a few weeks for $30K and my house would probably sell in a month. Conversely, I could drop my house price by that same $30K and sell it in a month. But I don’t have $30K room to pay either for the ad campaign or the agent commission. $10K maybe. Would you sell my house for a $10K commission? If not, I’m going FSBO.
Dan,
I am glad to say we do agree on one point: there are too many agents out there who are in the business part-time, while working at a “real” 9-5 job, or view it as a cash-cow hobby or simply empty-nester housewives wanting to be involved in something meaningful, while the husband still brings home the bacon. (I am sorry if this might sound politically incorrect but it is factually correct). They simply do not treat their business as a business.
These people have little to lose, are not as invested in their profession and simply cannot provide the level of service a full-time, engaged & dedicated Realtor does. To keep up with the market you gotta be out there doing the job, you gotta keep learning and you have to be more than a hand-holder. I agree, a $30 000 commission for this type of agent is grossly overpaid if all they did was a flimsy market analysis and planted their sign on your lawn. However, let’s not forget that the $30 000 is split with the agent’s buyer, who may be deserving of his/her $15000 share… especially if they carry a greater burden of having to overcome or compensate for the listing agent’s lack of experience or ignorance.
Thankfully, part-timer’s often don’t stick around for very long because they just can’t and won’t keep up. The problem while they are around is that they tend to have little business sense, devaluate the service we provide and its value and then leave the rest of us to deal with their messes and to heal the wounds of burned customers such as yourself.
The Quebec Real Estate Law already puts a great burden agents forced to conduct due diligence (such as reviewing surveys for irregularities, checking with Registry office to ensure that the vendors are the deeded owners and that their debt-load does not exceed the property value, just to name a few) before the house is even listed and then we also carry a greater liability than a lot of out-of-province colleagues I have spoken to could imagine having to handle. If you are out of Quebec, then your perception might even be more accurate.
Yet despite these greater responsibilities, we are anxiously awaiting a revised Brokerage Law which would make continuing education a requirement for licence renewal (such as accountants and lawyers need to keep up with new laws or programs), as well as many other changes to the way we work that will make it harder for agents to obtain and renew their licences. Inevitably, it will cost more to stay licenced but I for one am not concerned about the extra costs if it means that I will be working/collaborating with a higher standard of individuals and comptence.
Hopefully, there will be fewer of the fly-by-nighter’s responsible for your lackluster experiences… and those of us left standing will shine for the true value we have been putting into the profession and proividing our clients with.
Dan
Maybe your problem is that you are unable to read people. You have had nothing but bad agents. You must like the house wife that flurts with you to get your listing instead of the business minded realtor. Plus 23 an hour for what you do may not be bad. The business side of it is, it does not matter what you do. Everything has a value. Doctors make good money for a reason. I dare to say they make good money to. The man digging trenches with a shovel all day works harder than the doctor does, yet the doctor makes more money. Why do you think that is? The burger king loosing money on the $1 burger. I hate to tell you they do not loose money on them. At a dollar they are still making money. I worked at McDonald’s many years ago. First public job. When I was there they had about, maybe $1 in the meal and sell it for $4. There biggest expense was the paper that was involved. Boxes, naplins, cups and tray liner. I had a buyer a year ago that was a designer for McDonald’s. He had a contract for designing these new McCafe’s coming out everywhere. He told me that McDonald’s has to take 3 years to create something. If they come out with anything new, they have to start planning for it today and building up stock. Say it is a new burger, like this angus burger they just announced as new. 3 years ago they started making new boxes, signs, and went to the farmers and had them to start raising this new beef. 3 years. So could you imagine how much supply they order at a time. Do you think McDonsald’s would ever come to you as a farmer and say we only want 100 cows from you. NO. They would say we will take all of your 100,000 cows and how fast can you get us more. The farmer could make a 1 off of each cow he provided to McDonald’s and could be rich. This does not happen in the real estate market. Real estate is not like that. I have a friend agent who sells 400 homes a year. This guy is nuts all the time though. Now he may make a million a year, I think. You say see it’s worth it. Most of you wouldn’t think so. He has 15 people on his staff. Probably half of them are salery. He has an office. He pays for a moving truck. He has commercials. He has everything like a real business. The average person would be insane being him. The responsiability and money he manages is unbelievable. SOme of you say no real estate agent should make that much. He is not just a real estate agent, he is a business owner. He has all the expense of a business. If you started a business would you want to be told you make to much money or if you were good would you think you should make an infonate amount? It is called Free enterprise in America.
Dan maybe for your next agent find an agent who will not do anything you want them to do. It’s either there way or no way so to speak. That will be an agent that knows what works. Has there business going. Does not need your business if your going to be crazy with them. The agent that will tell you no is a great agent. That will be the agent that runs this like a business and not like a job or hobby. My friend, when he comes to your house he says he is interviewing you, not you interviewing him. He will get your business if he wants it. The question is does he want it.
Please no more sandwich shop stories Dan. That story had more holes in it than swiss cheese. Thanks,
Marcelann I know I am repeating what you said. But, if real estate agents are so bad and make so much money for so little work. Than why are not everyone realizing this real estate agent business as an opportunity to get in it and be different than the other agents and put us out of business. Lord knows I would love to find a new way to run this business and make more money.
Derek,
You’re probably right. I chose real estate agents because I was more interested in how they looked rather than whether they could sell my house or not. I guess that applied to both the male and female agents as well?
And I suppose the buyer’s agents who would come through my house with their clients without first educating themselves about the property was because of me not because they were ill-prepared to do their job.
Good analysis.
not
Derek is absolutely right about a few things: a good agent who knows his or her stuff and will tell it to you straight. The problem is that most people don’t want to hear the truth…they want to hear what they want to hear. They hire the agent who agrees with them and then paint everyone the same color as the weaklin they hired who did not get the results.
Dan, this may or may not be the case for you, but it happens a lot. When we do our proper diligence before sitting down with a potential client who has either made up his/her mind what their house is worth or previously interviewed a yes-man agent, they are shocked sometimes even offended by what we present them, and opt for the cheaper guy.
It is also true that a “professional” successful realtor won’t have a problem walking away from a contract with vendors who expect more than the market will bear… the desperate, hungry unsuccessful ones will cave, take the listing… while they are looking for a job to bring home some money every week!
If you are paying for a TATA ride, don’t complain about the lack of comfort, reliability or safety that you would get in a VOLVO ride. It’s as simple as that. Both will get you from point A to B, but the first won’t get there as quickly, and perhaps with a lot more headeaches and costly surprises, that the second.
Dan – you said your friend runs a 16-man team closing 400 transactions a year, that breaks down to approx. 40 transactions per agent and you said he works like a maniac despite having a team in which each individual likely handles certain aspects of the overall process…. it comes back to my earlier comment about 30 transactions a year for a 1-man/woman operation being a very heavy load.
If realtors worked on a pay-as-you-go hourly rate + expenses such as with many other professionals, maybe the public would then have a bit more respect for all that we need to do to make them happy
…and we would not have to cross our fingers that they will buy or sell in a reasonable time frame + we would get paid no matter what, every week, just like the sandwich gorl at the counter 
Dan,
My friend runs a business. He is not just a real estate agent. It would be like you running your sandwich shop and create the perfect sandwich. People from everywhere wanted your sandwich. If you started making a million a year off this sandwich, you would not reduce the price of your sandwich. It’s called free enterprise. If your sandwich was to expensive, people would stop coming to your sandwich shop. You would than go out of business. If your business boomed you would still not reduce the price because now you are probably going to take on more overhead by expanding, opening another store maybe. A true fact in business is that you are either growing or dying. There is no in between. Bill gates has more money than he could ever spend right now. Should he.reduce the price of microsoft software. No, because he knows what fair market value is. Warren Buffet once made 9 million in 1 day. What do you think he would of done if you told him that he should of only made 1 million. I think he would of laughed and said your funny. Both of these man have gave more help to society than most could dream of. These guys earn what they are worth. America was set up that way. Dan if you think you have a better system than most of the other agents, than why don’t you get in it. I guarantee you will make more than 23 an hour if you are better than 90 percent of the other agents.
This is soooo true! I was so naive to think that he was on my side, now that we are in the process of negotiating, he seems to be brushing off my concerns everytime I bring up one. He tells me that is something that I can take care of later on when I get equity or something like that. I have had to put my feet down several times to demand that either it gets fixed or I walk away simple as that. I felt he was no longer on my side the time we signed the counter offer.
Sari,
I hate that for you. The trick to negotiating though is to know what you want before you start ngotiating. You should have in your mind what you want and what you will settle for before the paperwork is ever in front of you. Your agent should know what you want and what you will settle for. Most people do not know how to negotiate. Most agents know how to negotiate but do not know how to make negotiation go in the path it is suppose to go in. It is like taiming a bull. You never know which way the bull is going to start running. The bull is stronger than you so if he runns in any direction you can not stop him. The bull is a buyer or seller. The strength of the buyer or seller is that the buyer or seller is more emotionally tied to the transaction than the agent. As an agent we should coach you to not be emotional during negotiating. 99% do not do this. Most of the time buyers or sellers are mad, sad, out for blood, or anything but calm and collected. When buyers and sellers are like that they do not think right. They will react without logical thinking. So agents most of the time will back off when there buyer or seller becomes emotional. Than the situation gets out of hand and everyone is mad. If you and your agent had a set in stone list that you would not negotiate. Than ask for the world and see what you get. If you only get your list than you got what you want. If you got your list and a little more, than be happy the other buyer or seller and the agent gave your way a little. If you did not get what you wanted on your set in stone list, than it is easy, you walk away. The problem is most people do not know what they want. They just want everything. When they do not get it than they think they are loosing. Ever heard of the saying don’t go into a knife fight if you don’t expect to get cut. You just have to cut deeper than your opponant. But you still got to expect to get cut. Hope this helps.
I think this is hilarious! Realtors are there for a reason, to inform people. Mainly, prospective home buyers are aware that the agent is paid on commission, but alot of people go with one, because they know that they do not know the ins and outs of the real estate business, and wouldn’t have the slightest clue on where to start. The comment I get the most kick out of is the one about the “false urgency”…well that’s all fine and dandy advise, until someone wants to buy a house they really love and they take your advise and dick around, low ball an offer or wait too long….and then…Ooops! the house gets sold to someone else. The market is a first come, first served market. If you dont come to bat with an offer that the buyers will actually consider, then they absolutely wont take you seriously and they will keep waiting for real offers to come in…the agent will more than likely think you are a moron for not taking their advice. Also, I find it quite funny how you contradict yourself alot in your little rant. Judging by the sounds of this interesting little fairy tale you wrote, that you are probably a minimum wage, average Joe who thinks that they know everything, and probably did get suckered by an agent who wasn’t very good…which happens…but not every realtor is the same. Being a realtor means that you risk not making money at all, therefore the rewards ( if any) will be higher than your average Joe who wont take the high risk jobs and are comfortable making minimum wage until he/she retires. I sure as hell am not one of those people, and would like to be able to make an unlimited amount of money…realistically….who wouldn’t. Its people who believe that everyone is out to screw everyone else are the real scam artists. What a joke!
Ouch! Paula was harsh. I agree with most of her points though. Everything except the part where she talks about the average joe. I am not going to assume anything. However Paula is right about the urgency about the market. It is the same with anything you buy only you will never find 2 houses the same. So if you miss on a steal, well than you just missed and you will never get that same deal again. You may find a better one or a worse one, but it will never be that one again. I can not tell you how many buyers I have had that want to ponder on something and days later it goes under contract. The old saying goes “nothing sells like a sold house”. Than my buyers pop back up and willing to pay more if the other buyers will go away. Its to late. I tell my buyer’s “don’t should on yourself”. This sounds like something else. But I tell them this means don’t do something that 2 months from now you will look back and say I wish I shoulda done this. Now most buyer’s would say well we have to think on this because this is a big purchase. I agree, but when you find the house that is not the time to go back and think about it. You should of thought about that before you called the first agent to look at a house. You have to be prepared when you find the house. You can not find the house and than go back and think about it for a week or so. Sometimes you can, but this is the worst way of going on the biggest decision most people will make in there lives. Good comment Paula, just next time try to kill them with kindness.
HAHA! I wish I could, but I was built to be agressive…LOL but I know I was a bit too harsh…just got under my skin. My thoughts are just that majority of first time home buyers need a helping hand and so do alot of second or third time home buyers. Not all realtors are the same, you may have a horrible experience with one, but could befriend another for years. It really just depends on how you look at it. Be smart, do your research…and if you dont know, ask a professional. Don’t just assume you can do it on your own. As for the way in which they put food on the table, well that’s their own business, no one works for free! Not even Mr. Cheap. As they say “time is money”….what is your time worth??
Paula
Paula,
I understand that built aggressive part. I have been pretty aggressive thru this whole post. I have had lots of people come in and try to attack me. I think I defended myself pretty well. Hopefully in time I will get everyone on this site to respect agents a little. Most people do not see what all agents do. They do not understand how tough of a business it is. I try to go after Mr. Cheap sometimes. He is smart but sometimes does not tell the whole story. Keep on being aggressive Paula.
OH DEREK – I am an EX-Realtor and 100% AGREE with you!!! I find Paula to be “one of them Realtors” who feel they “HAVE TO” defend their profession (well because they have to don’t they – it isn’t like they’re going to agree with you for Pete’s sake lol)!
But Your Words are on the money! Agents make ZERO unless the deal closes and if they have bills to pay, kids to feed —- do you really think they’re thinking about YOUR best interests? Wrong! They’re human! And any Realtor who says they “Aren’t in it for the Money is LYING”!
JM
Thank you for agreeing with me. You being an ex realtor, you know first hand how much of a smack in the face it can be sometimes.
I do disagree with you a little on the reason agents are in the business sometimes. We are all in the business to make money. But most agents who are in it to only make money, usually do not last in the business. Simply because the drive for more money is usually not enough drive for the pain that is in the road for becoming a successful agent. It is kinda like the mouse that was going after the cheese on the mouse trap. You know what the mouse said when the trap popped on him when he was going after the cheese. He said forget the cheese I just want out of the trap. That is the sole purpose most businesses fail. Most people start a business only thinking of the money. Than early in a business the pain starts and they give up. That is why 9 out of 10 business fail within there first year. The great business owners have more than the money on there mind. Aberham Lincoln, Henry Ford, Sam Walton, Gary Keller, JCPenny and Zig Ziglar are all greats that you rerely heard them talk about money. Now if you ask them they would say it is important, but you have to have more motivation than that. My motivation is my family, the history books and Jesus. The money side is that I want my wife and daughter to have the best life possiable and money to not be an issue. I have no college degree, nor do college and I get along. So my only option for me was I had to own something and hire the college degree people to work for me. The history side is that I want to do something great so I could write books and do siminars that help other people do whatever I did. Hopefully in time I will be a Zig Ziglar or a Sam Wilson. The Jesus part is that I want to help people out. Alot of people are in a bad situation with money or relationships. I would love to be in a position to where I can finance a homeless shelter or pay to have a non profit hospital built for people who can not afford insurance and need the cheapest (but quality) medical help they can get. I have made a decision I will die broke. What good is it to die and leave a zillion dollars to your family to fight over.
So you have to have more than money as a motivation.
lol I had to come back and add to my previous post
because you are right in regards to the “Money Factor”.
When I first became a Realtor it was definitely NOT about the money. I loved looking at houses since I was a child and always dreamed of doing it for a living. As an adult I was taken advantage of by a Realtor and swore I’d never be a victim again. SO my “Initial” intentions were admirable!
In the beginning I felt GOOD about why I was doing it and once things got rolling (and boy did they get rolling) I hate to admit it but it DID start becoming more about the money. It wasn’t just a “Listing” anymore – it was “How much will it cost me to market this property, How much can I make, What buyer market am I going to go after and all these other scenarios that had LITTLE to do with the “People”. I can’t tell you how many times I got a seller to list at a pretty high rate knowing FULL WELL that I already had a buyer lined up and would make BOTH SIDES of that deal!
I mean I was GOOD … VERY VERY GOOD at sizing up a property right away and about developing a marketing strategy that gave me an average list to sell time frame of under 67 days (yes even in this market) … My Buyer database was a thing of beauty and I’d very often have a buyer for a property within hours of listing it or even BEFORE hand!
BUT … one morning I woke up and just realized that something had changed for and in me. I had lost the “LOVE” of houses and didn’t care so much about the “People” anymore …. I cared about the bottom line and what it could do for MY life (for my kids etc…). And ya — that’s all well and good because as a parent it IS my job to give my kids a good life … BUT … this really truly got me down and about 6 months ago I walked away from that career!
There are people out there who will never tire of making money and I WILL MISS what I did because I again – I was REALLY GOOD at it, but I am the type of person who HAS to know I did it HONESTLY and unfortunately a Realtor (the majority of them in my opinion) cannot say that about their bank account. That money was earned by “Leading” buyers to properties that stand to make them the most money. I witnessed many Realtors who pushed properties because of the BONUSES that came with them … BONUSES that were never disclosed to the buyer! I did it one time and just felt AWEFUL about it. God knows that check was incredible but to this day it still bothers me because I feel that a Buyer’s Agent should let their BUYER get that $$ off of that mortgage vs. pocketing it – but I also understand that an Agent can go months with NO income so that bonus can put food on their table or presents under their tree!
A BUYER should ALWAYS ask if there is a bonus attached to ANY property their “Buyer’s Agent” is pushing!!
Anyway … didn’t mean to make this so long but there are just so many reasons why a BUYER should ask so MANY questions and the truth is they probably just don’t know the right ones to be asking.
NO: It’s isn’t all about the money … but even Agents need to eat and it CAN and DOES cloud their judgement …
JM
I find my self to at times looking at it the way you do. I find my self sometimes getting mad at my wife when she ask me to do something small and I break my back and jump thru the ring of fire for my clients. I find my self skipping church at times to go show homes to hot buyer’s. I sometimes have to have a check up from the neck up. I have to go appoligize to my wife, because she is one of the most important people in my life, more than my clients. I have to tell my clients no at times I need to be in church. Sometimes I just have to take a day and think what am I doing this for. Get back on track. Than I am back in love with real estate. It tends to burn you out I think if you look at it from only a money perspective. It gets boring to me. I have been on listing appointments where the couple and I have cried together (dont tell anyone lol). I have been on appointments where we did nothing but fight about every idea or price. I remember going on a listing appointment one time and it was an old couple. They were getting ready to retire. They had an arm loan. They were on the verge of loosing the house. If they foreclosed they were going to have to continue to work. We looked at the CMA and determined there was nothing I could do. They were going to get foreclosed on. I helped them with the bank. They still lost the house. That listing appointment was about 4 years ago. I still remember seeing there face as I left there house. They knew it was over when I would not list there house. I drove down into the cul de sac of the neighborhood and cried the hardest I have in a long time. That was the first listing appointment I went on and wanted to list the property, the sellers wanted me to list it, and we could not.
You have to understand I do not cry alot. I probably cry maybe once every 3 years if that.
JM I respect you. Not many people will step back from something they make alot of money at and are good at, because of an issue of the heart. Most people will ignore the heart and look at there wallet. To me all the successful people in history have always followed there heart and not the wallet.
Way to go JM, do what you love and not what makes you the most money.
Thanks Derek and I’m actually starting college again in May for my RN Degree (so I was totally serious about everything I’ve said).
I worked as a CNA back with I was like 18 in a nursing home and absolutely loved it. I also did a lot of First Aid, Combat Medical Procedures during my Army career.
(I’m not just an Ex-Realtor but a Disabled Army Vet). I haven’t been this focused SINCE my Army Days so I KNOW I’m on the right track now.
Money is wonderful but I do think there is something to be said for “When is enough, enough”? I for one cannot wait to hold the hand of a sick child or senior citizen and know that what I am doing makes a difference. Nurses make a decent living … they aren’t rich by any means but I cannot imagine a more soul-satisfying responsibility!
Anyway .. thanks for the response and I can’t wait to post an update in 2 years
announcing my graduation from Nursing School. Whooah!
JM
My wife is a Dental Hygienist. She wanted me to go be a Dentist. I thought it would be cool. I went and watched our friend who is a specialist in the dental field. He was putting on the invisiable braces. Not the trays. The ones that have a plug in the roof of your mouth and than they stretch rubber bands to each of your teeth from the center of your mouth. I watched that get done. I used to be a construction worker. The tools that were used were to close to each other. I decided I could not do it. Have fun with the RN school. I hear it is tough.
Reading these comments, there seems to be a fair amount of emotions running on both sides which I think should be stripped away to look at the bare facts. I just did two real estate transactions. One as a seller and one as a buyer.
As a seller, we interviewed 4 agents. 2 of them should have paid us money for the time wasted as they brought absolutely zero to the table. The one we chose with was great for us as she sold our house in a down market and we wanted to close quickly as we were moving. At this time is was worth it to go with her as she had a lot of prospective clients she brought and she was a good negotiator. We ended up not getting as much as we wanted but was expected due to market conditions.
In our buying scenario, we found the area in which we bought by researching the MLS for some time and even ligned up the meeting with the builder ourselves. We got zero value from the listing agent as we found the house oursleves and our agent we used for the buying was a horrible negotitator (was reccomended from friends) so his value was non-existant as well. This was a 600K house. btw, I never saw gifts from any of the agents I dealt with, so don’t know about that as a cost. Honestly in my mind, both agents in this deal did little more than get in the way, as things were slowed down in getting (e-mailed) papework back in forth to the buyer by having to go through them and their turnaround times.
In summary, much like the automobile business has changed where you can do most of your research and purchasing through the internet, the real estate business is changing as well and I think the folks in it would be wise to adapt or be looking elsewhere for employment. For these agents who are talking about advertising in papers and magazines, and doing open houses, I would ask why are you wasting your money? Open houses in my mind is spending an afternoon with tire kickers. If someone sees something they like on MLS and are going to take the time to make an appointment, they are a more prospective buyer. I don’t know anyone who recently bought a home who did not do all of their primarly research through the MLS website. Yes we only see what people are asking but not selling price, but this is an arbitrary number anyway as the price listed is what they expect in a best case scenario. I would have no issues making a realistic lower bid (compared to a 5% below listing price offer from an agent who doesn’t want to offend seller or other agent). This is business, even if they do have soft skin, if they are trying to sell their house they might not like your offer but they are still going to look at it and counter if they feel they have a pontential buyer, especially if they have been sitting on it awhile, or are in divorce situaion, or moving, etc.. This offending people statement is pure BS. .
I know when I sell our current house, I will plan to list myelf on FSBO. I know I wont have the best access because I can’t get on the golden goose which is MLS. I have heard there are new businesses though where an agent will allow you to list only on MLS with no other services for a drastically reduced fee. This to me makes sense in certain scenarios. I have 15 years in selling various IT hardware, software,services, etc. and based on what I have seen from the agents I have met with, I am a much better negotiator. I don’t care it is a different product, negotiating is negotiating. Having said that, if agents bring clients to the table, I would be happy to pay them their earned comission.
PB – you have many GREAT points!
(NOTE: If you’ve read any of my posts you know I WILLINGLY Left Real Estate about 6 months ago BECAUSE of all this CRAP!)
1. Not offering 5% below list IS a load of BS … the agent only says that to keep that offer UP there to increase commission! I’m not saying a seller should take a HUGE loss – BUT – their agent isn’t doing them any favors by failing to point out how long they have lived in the property and what they would have paid in RENT had they been RENTERS that whole time … that $$ amount should be considered when ANY offer comes in. Even if it was a low-ball offer I ALWAYS advised my sellers to NEVER just outright reject an offer and to always do a counter off FIRST!
2. Listing on MLS … yes there ARE companies out now that have arrangements and will list your property on the MLS for around $400 and/or Realtor.com but you definitely want to make sure you can’t do this yourself for less … just take your time and ask ALOT of questions! I’ve been watching and researching this myself along with the FSBO business but am not versed well enough yet to fully comment on that.
I think as long as you use an attorney that you trust to do the paperwork you’ll be okay.
3. Open Houses: Less than 1% of Open Houses produce a buyer for that property. They are a FARMING tool for the Realtor to build their BUYER database. Now this isn’t always a bad thing because that Realtor could be holding an open house at another property and have a buyer walk in that is PERFECT for your property but Sellers need to know UPFRONT the true purpose of an Open House and the Realtors I know do NOT make that clear to their sellers!
4. Buying Vs. Selling Agents — It isn’t easy to be great at both of those labels. They may claim to be a buyers agent but when all is said and done they get PAID by the seller. While I often handled both sides of a transaction (happens alot in small markets) it was very HARD to walk that fine line when it came to disclosure and fiduciary duties so I do NOT recommend EVER using the listing agent as your buying agent. It’s a shame this guy came recommended and failed at his duties to you. Next time (if there is one) I’d ask for history of their deals that include figures that show the difference between the list vs. actual sales price. Once you look at a good batch (and I’d want atleast 6), you can get a pretty good feel for the ability of that Buyers agent.
5. As for “Gifts” … you probably wouldn’t be aware of them IF nobody ever brought it up. I advise a BUYER to always ask if there is ANY Bonus being offered to the agent by the seller if a property is sold within a certain timeframe. If the agent fails to disclose this and you later find out they DID get a bonus … that agent can lose their license! Those Bonuses belong to the BUYER – NOT the agent!
NOTE: The ONE TIME I did it …. I didn’t KNOW it was a violation. In fact I didn’t know this until I took the Broker Course 2.5 years into my career! It was NEVER brought up in the Agent Course and quite frankly — I saw memo’s faxed around ALL THE TIME to all the agencies — telling them about these bonuses and they were pinned in a area for the AGENTS to see but never a client. The point is — if Broker/Owners don’t make that CLEAR to their agents then they are as liable as the agent when all is said and done but MOST “Old School” Brokers still feel that these bonuses belong to THEM so they don’t enforce it or teach it and unfortunately NEW agents just simply have no clue and could end up losing their license over something they were never told about!
PS: Derek – sorry for coming in and posting on your blog – but couldn’t help myself
. Seems I’m going to have lots to say over the coming years lol.
PB
I am glad your listing agent was great for you. The other 2 agents you think need to pay you. They just was not right for you. They may be perfect for another person. In business people click and some dont. This is just business.
As far as your buying agent. I am sorry you feel you had a bad agent. The market has changed. You are right. The internet has made it much easier for buyers to find there own house. You have to understand that is not the agents job as much any more. Back when horses and buggies were around. The agent would have a MLS book. He would wave this book infront of you so you would sign an agency aggreement. Once you signed you got to look at the book and you felt like you had the top secret files to the government. The agents main job of todays greatest agents is in the negotiation and contract. In the 80’s our contracts were 1 page. There were about 100,000 law suits in my state a year. Today the average contract is around 10 or 12 pages. My new construction contract is usually around 40 pages. There are millions of law suits every year. The saw suits have grew more than the number of houses sold. Guess who the majority of those law suits are, FOR SALE BY OWNERS. It is easy for one party to lie or the other party to not know what to ask for and than later want something. The stats are that 80% of FSBO’s usually list with an agent. So in a given year in my market there are 80% of agent sold homes, 20% of FSBO sold homes. The 20% FSBO market is more problem than the 80% Agent market. Now agents deals go to court also. I know this. But your risk is much greater as a FSBO. The realtor association interviewed the FSBO law suits one time and you know what they said. “If only I had an agent, so the finger would not of been pointed at me”. It is like the saying the mouse said when the trap popped on him “forget the cheese, I just want out of the trap”. The commission we make is not worth the liability we take on. This liability does not cost us except in errors and ommission insurance. Insurance will alot of the times not pay for the mistake, because they try to say the agent did it on purpose and not by mistake. It is like riding a 55 gallon barrel in an ocean storm. You know a wave eventually is going to hit your 55 gallon barrel. You just hope it is not a big wave, cause if it is your barrel is collapsed and your dead.
Negotiation issue: I agree with you to an extent about you should not worry about offending them, it is strictly business. But if you know anything about negotiation, you should know that the trick is not to get the upper hand and shaft the other party. It is to create a win win situation. So in one sense you have to care about there feelings. I have a house listed now that a year ago they had it listed as a FSBO. An agent in my office brought them an offer. The sellers offered to pay 3% commission. The deal ended at a price of $410,000. The sellers were mad and said no. The buyer walked away mad. Now I have this house listed at $339,000 and the seller is paying 6% commission. If only the parties had not got mad at each other. Negotiation is a very hard science. Many people think they are good at it and in reality less than 1% of the population is actually good at it. I have read alot about negotiation. I do it every day, it is the difference if I sell house or someone walks away. I still scratch my head sometimes. The negotiation is where the agent today is worth gold. I can guarantee you on a custom build (especially 600K) I can save you more money than I will cost you. There are so many tricks in custom home building. I know alot of them. Enough to save you at least double what I will charge in commission. I guarantee you. I used to work construction, I know the short cuts. I could make a book on short cuts that builders can do. Some of them are not even short cuts, they are actually ways you can cut cost and still add sq. ft. .
Plus if we get out of the business, do you know the government would attack the home owner. The government knows there is alot of tax dollars to be made in home ownership. Who do you think pays speakers to to before the government and fight any taxes the government wants to impose on home ownership. I know me for one paid $500 extra this year to fight a bill that added an extra closing expense to home buyers.
I agree with JM about the bonuses. They just about a year ago changed the contract for us agents. We now have to disclose any bonuses given to us. I never took a bonus off of a house anyway. I always gave it to my buyer to either get a price off the house or use for upgrades. I am fine with the 3%. Pigs get fed, hogs get slaughtered.
Hi Derek,
I should probably qualify why I said the real estate agents should have paid me. I am also in sales and took time out of my day to meet with the agents. Two of them showed up with no market research on my neighborhood and absolutely no idea what to list my house after the visit. They wanted a second meeting. I have been doing IT sales for 15 years and if I showed up to a meeting with a client and did that I would never be invited back. This has nothing to do with one person clicking well with another. I realize there are going to be very good agents and very bad ones. It seems the extremes in real estate are even more so because of the easy barrier to get in to the industry.
Perhaps the liability thing is an issue in the U.S. I am in Canada and the real estate agent as far as I can tell has absolutely nothing to do with this. I don’t doubt you have the ability to carry extra coverage on behalf of the client, but much like warranty on a new TV, I doubt that it is often used. Everything must be done by lawyers on both ends, so the liability thing is not an issue here. If an agent told me he was protecting me from liability as the value-add, I would probably suggest they take up a career in the insurance industry. Anyway I wouldn’t buy into it here, but perhaps this is different in the U.S.
I realize you are in the industry and obviously are very passionate about it. I believe things have changed in this industry to a point where the fees do not make sense for what value is brought to the table in certain situations. The other thing that should be changed is the compensation model itself. The reason I believe I have met as many horrible agents as good ones, is the industry rewards the agents equally. The agent who does the actual selling in most situations is the one who brings the client to the table, yet the listing agent gets a good chunk of the check. Also in Canada I believe the agents get paid 7% on the first 100K and 3 % on each 100K after that. On any house over 100K, there is really not much incentive for an agent to make an extra 5 or 10K for the client on the selling price because the small extra percent they would make outweighs the risk of further negotiation and the cost of the extra time.
If I was in this business and was good at it, I would want to see some reforms to better incent the agents for selling higher. I don’t mind paying for value. As mentioned my first agent was excellent and I never even considered negotiating her comission. If anything I would like her to be paid more and better compensated for selling higher not getting the automatic 7% on the first 100K.
Anyway as someone who has spent his life saving before buying, I don’t fall into the realm of typical home buyer. I do a lot of research, I have paid between 35-50% down, and I make a business decision on a house, not an emotional one. I just feel for what is provided in a non-down market, using an agent on the current fee structure system is not worth my hard-earned money.
Hi Pb,
I understand what you are saying. It is easy for people to get into the real estate business. It is hard to learn everything and pass all the test. Never the less, the class and test usually do not last much longer than 6 months or so. So compared to a college degree it is quite simple. It is also simple to get started with a company. I agree with you on the easy door to get in part.
The liability part. I know it is hard to tell a seller or buyer you should use me strictly for the liability reasons. They would laugh and say is that all you got. I hear alot of people say the liability is on the attorneys. This is totally false. The attorney has no liability. Attorneys rarely have liability. They are the ones who write our contracts we public and agents have to use. Do you think they are going to put a trap for them to step in on the contracts. No way. They make the blame on someone else. I can not think of one case where the courts step up and say the attorney was at fault or the contract did not have a blank for something to be answered correctly. They change contracts every year to try to make them better. What is the reason for the changes. It is because of the problems they find thru the year. Never do they say though the attorneys should of had this in the contract. They point the blame at the agent, buyer or seller, never the attorney. A perfect example of this is title insurance. When you buy a house an attorney does a title search. We agents do the best we can with this, but we can not do as great of one as an attorney. Title search searches for any easments, road construction coming, past owners, current owners, taxes, leans, flood zones, anything that could be a splinter to the buyers. As an agent if we miss something with this and a contract is written and signed than something is found later. Guess what, we now have a law suite and the buyer is in court suing the agent. The attorneys have created something called Title Insurance. The attorneys do the search about few days before closing. Than when you go to closing and there is a charge for title insurance. This title insurance lets the attorneys off the hook for there research. If something is found later, and you try to sue the attorney, title insurance comes up and pays you off for the damages. Worst scenario they will give you back everything you paid for the house. The attorneys can do a better title search than we agents can, yet they have insurance and we don’t. That is a classic case of the attorneys make the contracts so they are not the ones being fired at. There are tons of areas like this in the contract, this is just a real obvious one.
Commission: That commission rate is different than ours. I do agree they have to change as well. They are old ways of doing things. I will tell you though, they will not get cheaper. If anything they will go up. The world is changing. It is getting more expensive for everything. Greed is always here on earth. The reason I say it will go up if anything is because the profit margin for a real estate office is already low compared to other fields of business. The IT industry from what I understand used to be good and now is going to india. The profit margin for a real estate office is only about 5%. The average for any business I think is at least 10%. This is why lots of real estate businesses usually do not make it. Paper marketing is very costly. Office space is very costly. The market is changing and paper market is going away and everyone is going to the digital office now. This will cut cost. But the internet is booming and so that money will only be transfered over to creating web sites, making more advanced phone options, money spent on LCD screens instead of paper. Think about this: in 1993 agents did not have computers and cell phones. If I were an agent in 93 I would of saved 200 a month on a cell phone and around 300 a month on computer equipment. Today my 2 biggest expenses are computer technology and my phone. I can’t tell you how many web sites I am on. When I get free time to goof off. I am on my web sites trying to make them better. Just 16 years ago these things did not exist. I remember having a pager and paying $10 a month for. Riding down the road and having to pull over and call someone when my pager went off. The market has changed but the expenses have only been replaced by another source. And with the internet there have only been more sourced added. A perfect example of this is the number of people who have filled bankruptcy this year. In Canada in 94 you had 65,000 cases file bankruptcy. In 2008 you had 125,000 file for bankruptcy. I dont even want to go into my country the USA. ,We go thru money like it burns our hands. Anyway, it has rose more since 94 to 08 (14 years) than it has in the 60 years before 94. Reason this is: I think because there is simply more stuff out there now. Everyone wants an ipod, a new computer. These things did not exist before 94.
Sorry for the long writing, but story sold simple the profit margin for a real estate office is low as it is. So I do not think commissions will go down, only up. People demand that you do more today and it cost money.
Your an IT guy. Just think probably 15 years ago your job did not exist. So to a company you are an added cost. There are some companies out there that have rooms full of servers and IT guys 24-7 running that equipment.
Thanks PB you are one of the more smarter ones on here. You make good points, instead of just saying well realtors lie and they should all die for it. I am still not sure I have proved my point based on what you said. You still may have the upper hand. I will have to sleep on it and maybe write more tomorrow.
I can tell you from my experiences using a realtor and not using a realtor. I believe I got a much better deal by myself not using a realtor. This article is exactly true, realtors want to close the deal and as a buyer they push you up and as a seller they push you down. Let’s face it, everyone, including realtors is out for themseleves. If you are not afraid of a little work and research you are better off doing it your self. You can get current sales information that realtors say only they can get easily by going through mpac or some other agencies you can pay. Most realtors are grossly overpaid for what they do and the little amount of education or advice they have. Let’s see I can become a realtor in what, 6 months after taking a simple course only an idiot would ever fail. My suggestion to buyers and sellers is if you are not afraid of some work then do it yourself, you will almost always come out ahead.
Ol David,
So most realtors are out for themselves, right. You say most of us are overpaid. You also say only an idiot would ever fail. Let me repeat the facts that I have already said about 5 times in this blog. David the profit margin in this business is only about 5%. It is very easy to over spend and go belly up very fast. You do not understand this until you are in this business. It is not fun to spend $2000 of your own money in a marketing plan only to realize at the end of it you got nothing out of it and you found a ton of mistakes you made. Everyone makes the mistakes also, everyone. I see huge companies that make marketing mistakes. Marketing it’s self is a very tricky business. Your right it is only a 6 month class to get your license. And we act like that 6 month class makes us have doctor degrees, I agree with that. But, what you learn in that class is nothing like what you will need to stay in this business. It is simply just a wall the government puts in front of people to stop the initial non motivated people. As far as we agents are only out for ourselves. I can give you a number of my clients to talk to and they will tell you I was for them. And I am not an exception. I know alot of agents that are out to really help there clients. Very few of them are acturally out to get there buyer to pay the most price. I am talking 1% or 2%. Do you know for every $1000 of price negotiations I make or loose a whooping total of $14.10. That is off our standard resale house at 6% commission. I make $14.10 for every $1000 the buyer pays. If you are the type of agent where every deal your going to try to spueeze an extra $14.10 or $28.10 into your pocket. Than your trying to hard. You will waste so much time trying to get your buyer to come up on price on every deal that your probably not going to sell but 5 homes in a year anyway. I have always been honest with my buyers. I will give them what I think it is worth before we even start negotiating. Now if I say it is worth $150,000 and the buyer has an emotional attachment and they are willing to pay $160,000. That is not my fault. My advise at that moment is to walk away and if the buyer says but I love it and it is worth the extra to me. Than who am I to tell them no it is not worth the extra. David you are an easy one to overcome. Come on try harder.
I know real estate agents work very hard and most are good and care for what they do.Well the one I had with the biggest real estate agency Newyork state sucked and was not doing his job.He was our buyers agent and worked for us(thats what he said)Well the house was listed 400sq feet bigger and taxes were alot higher.The taxes listed was what the old lady was paying.She got a huge discount from nys enhance star program and her husband got discount for being a vetrean.Our buyers agent said the taxes were 2300 and that before the basic star program were entiled to.He point blanked lied to us and taxes are 1000 more.Hes not listing agent and blamed him,Well then what the hell is he good for?He should make sure its right.
Hes a realestate agent should of known by the taxes something was wrong.Well my wife is in tears casue wants the house and I dont.I will not overpay for a house from a lying scum bag.
All i know is for opening a door and saying here is the kitchen etc does not warrant 4000 commision.
Like I said I know real estate most anyways,work long hours and are good people but like any other profession there are scums out there.Wehn buying a house,make sure get comparables,you the buyer check the county and town records make taxeas and sq footage are correct.Would think thats what buyers agent is for but Cant trust anyone.
Tom V,
I am sorry for what is happening to you. I think you for still saying we agents work hard even though you have an agent that is dropping the ball. I agree with you that your agent should of checked on the taxes. You should ask your agent to show you everything. I know me being a buyer agent. I open my door to my buyer’s. I show them everything. It takes alot of guesswork out of the process. Things like a market analysis can be read totally different ways with different people. You can have the same house and 10 agents and 10 appraisals can be done and you will have 20 different prices. I think it is important for us agents to be a source of the source, but not the source. This means we need to provide the information, provide our opinion (that is what it is agents an opinion), and then let the buyer make the decision. Tom we as agents do and should expect to trust that the other agents give correct information. Sometimes that hits us in the face at the expense of you the buyer.
Tom if you found out the home is 400 sq ft less and taxes are 1000 more after your offer was accepted, I would go to the 2 agents and ask them to speak to the seller and tell them that you wish to cancel the contract and go back into negotiating. The seller defintly is not propably going to want that. If the agents can not get you a result with this, than call the broker in charge at the 2 companies. If that does not get you anywhere, than go to the local realtors association. Hopefully these steps will get you somewhere. If your agent made the mistake and than told you before you signed the accepted contract, than there is not much that can be done.
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